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Direct Mail Outlook : Mail Matters for Marketers

December 2011 By Erik Cagle
Senior Editor
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The U.S. Postal Service (USPS), beloved though it may be, is not earning any brownie points with the mailing community following the announcement that it was moving forward with its exigent rate increase request of 5.6 percent. But, you have to feel for Mr. ZIP, as this move wasn’t his idea.

As recently as this past August, Postmaster General Patrick Donahoe told a quarterly meeting with major customers and industry associations that the U.S. mailing industry was “too fragile” for a major rate increase. However, last month the Postal Regulatory Commission (PRC) told the USPS it needed to commit, one way or another, to its request for an increase above the rate of inflation to avoid prolonging uncertainty for the mailing community (a rate increase would take effect Jan. 22, 2012).

Counting on Congress

The Postal Service was hoping to delay the PRC petition in order to give Congress more time to develop a postal reform package that could ease at least some of the ills that are behind the agency’s estimated $10 billion loss for its fiscal year ending Sept. 30.

Less than a week before the exigent increase filing, the Senate had announced a bipartisan plan that would, among other things, preserve six-day delivery for at least two years, return nearly $7 billion in overpayments USPS made to the Federal Employee Retirement System, and spread out the payment schedule for the funding of future retiree health benefits, a $5.5 billion annual albatross.

What the PRC is saying, clearly, is that the mailing community needs a little cost certainty as soon as possible. Which is somewhat ironic, since the Postal Service has been left to flap in the breeze for the past few years, fighting to rid itself of the onerous prefunding, battling to get its manpower in line with volumes (without sympathy or support from its unions) and unable to run itself like a regular business—one that it insists could be turning a profit without the government meddling in its affairs.

It’s not like the mailing community doesn’t have a dog in this fight. But it’s important to note that, when push comes to shove, Mr. ZIP needs to look out for his own interests. And, as the postal drama continues to unfold, printers and mailers are mindful of their obligation to continue providing customers with maximized printing and postage savings. That won’t change, regardless of what the USPS looks like five or 10 years from now.


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